Decentralised EnergySupporting Climate East Midlands in the development of local renewable and low carbon energy

Ben Lynch & Barry Knight – Carbon TrustAlison Crompton & Kirsten Elder - AECOM

28th February 2011

Our mission is to accelerate the move to a low carbon economy

We cut carbon now by

Providing specialist advice and finance

to help organisations cut carbon

Setting standards for carbon reduction

We cut future carbon emissions by

Opening markets for low carbon

technologies

Leading industry collaborations to

commercialise technologies

Investing in early stage low carbon

companies

Introduction Context of Decentralised Energy The DE Programme CT Experience and UK Market Internal Engagement Policy Development Next Steps

Agenda

Introduction Context of Decentralised Energy

Agenda

UK CO2 emissions – reaching future targets

Timeline and National Policy Context

Timeline and National Policy Context

Code level 1 – Part L 2010

Code level 2 – Part L 2010

Code level 3 – Part L 2010

Code level 4 – 25% < Part L 2010

Code level 5 – 100% < Part L 2010

Code level 6 – Zero Net CO2

Emissions

*Code Level 6 includes both regulated and unregulated emissions and the definition of ‘zero carbon’ is currently being redefined

East Midlands in Context

4.5 million people20% population growth by 202778,000 GWh total energy demand (excl transport)800 GWh from renewable energy (2007) ie 1%41 Mtonnes CO2 p.a. (10.3% of UK emissions)7% CO2 reduction since 1990

We can no longer consider a single building or single energy sources

Energy sharing is a key element

Advantages of Decentralised Energy

• Improved security and diversity of supply• Decarbonised local energy supply in line with

national policy objectives• Decoupling of economic growth and development

from CO2 emissions

• Use of strategic infrastructure to provide wider benefits to businesses and community

• Strengthening of the region’s position as a low carbon economic area

Linking Planning and Investment

Energy Spatial Plan

Key Questions

•What is your understanding of Decentralised Energy?

•Have you identified opportunities for potential Decentralised Energy schemes within the authority?

•What are the key issues for you in developing Decentralised Energy projects?

The DE Programme for the East Midlands

Programme Aims

Aim 1: Provide bespoke support to improve knowledge across the East Midlands on Decentralised EnergyAim 2: Carbon Trust to act as an independent advisor in discussions with financers and delivery partnersAim 3: Facilitate collaborative learning between Local Authorities and provide a knowledge hub for shared learningAim 4: Develop the business case for investment in DE across the East MidlandsAim 5: Create a lasting relationship between the Carbon Trust and participant authoritiesAim 6: To achieve CO2 reductions in the East Midlands, at lower unit costs through the development and delivery of a planned approach

Introduction Context of Decentralised Energy The DE Programme

Agenda

Decentralised Energy Process

Political Support and CommitmentEngage with key internal stakeholdersCapacity Building

Win Hearts & Minds:• Raise awareness and understanding of DE• Engage Senior Members• Establish internal working group• Secure DE as relevant priority for the borough• Engage key stakeholders

Policy Development

Strategy and Policy

•Identify strategies to facilitate the implementation of DE •Ensure consistently worded DE policies (e.g. waste, housing, energy, planning, LDF, Core Strategy)

• Using DEMaP methodology, accumulate heat loads into clusters

• East Midlands DECC Study - Strategic analysis of the region for renewables and decentralised energy (report due March 2011)

• Produce a viable heat load profile for CHP/DH project opportunity

• Identify key stakeholders - public and private sector

Heat Mapping

Detailed Feasibility Studies

Viability Options Analysis

•Feasibility studies, engage stakeholders to identify infrastructure routes and constraints

•Test operation scenarios and CHP sizes, identify anchor loads and lead organisation

Procurement Strategy

Procurement and Contracts

•Identify SPV options for borough and stakeholders•Advice on options for heat tariffs, use of electricity•Licences, revenues and ownership issues, maintenance contracts, risks and liability•Standard Heads of Terms, MoUs, Contract templates etc.

Developing the business case

Resource Commitment

•Identify and secure budget to carry out options •Appraisal and feasibility study for DE projects •Develop implementation programme•Secure internal resource to deliver the DE project

Partnering and Delivery

Develop ESCo Model and Delivery Vehicle• Inter-dependent on (1)• What are the ESCo objectives, and how

should the model reflect this?– Maximise revenue– Tackle fuel poverty and other social

objectives?– Reduce public sector energy costs?– Finance– Risk

Introduction Context of Decentralised Energy The DE programme CT Experience and UK Market

Agenda

Carbon Trust project list

Carbon Trust project list

Coventry City Potential Savings

Coventry study area’s total heating demand is 350,000 MWh/yr

A city-wide Coventry district heating scheme, to provide heating to 35% of homes and businesses, would save

22,000 tonnes CO2/year (40% of total Council carbon footprint)

Planners’ Toolkit

Assists planning officers to determine compliance with low carbon energy generation policies and help the developer submit a compliant application

Developed by Carbon Trust, Encraft and planning officers from Coventry, Solihull and Warwickshire districts

Introduction Context of Decentralised Energy The DE programme CT experience and UK Market Internal Engagement

Agenda

The First Step

Project sponsor – choosing the right person

Which skills will this person have?– Technical– Planning – policy or development– Financial– Communications– Knowledge of local businesses

No one person will have all of the skills so it will be important to recognise that he/she will need to draw upon others to augment their own skills

Choosing the right person

Someone who wants the roleSomeone who has the time – it is part of their day jobSomeone who will be able to form a Working Party and who will report to a Senior Level Steering Group

Also required...

• Able to secure political will• Understand who the key internal stakeholders are• Understand the wider need for engagement• Secure long-term commitment

To be discussed at Workshop No.1 (April)

Discussion

• To what extent is there Corporate buy-in and commitment to developing and implementing projects to reduce CO2 emissions?

Introduction Context of Decentralised Energy The DE programme CT experience and UK Market Internal Engagement Policy Development

Agenda

Step Two

Policy Development – Why and How?

PPS1 & Climate Change Supplement

Expects local authorities to encourage the uptake of decentralised, renewable and low carbon energy generation through the LDF

Draft PPS: Planning for a Low Carbon Future

Replacement for PPS22 and Climate Change Supplement

– Reduced role of energy targets– Emphasis on delivery of local

heat networks through local policy

– Where is it now...?

Household Energy Management Strategy

Former Govt strategyNew focus on DH by removing barriersEncourages better use of surplus heat through carbon pricing

Continued support by Coalition Govt?

Regional Level

Regional Spatial Strategy PoliciesLZC capacity study– Commissioned by East Midlands Councils– DECC requirement– Identifies potential renewable energy resource– Identifies areas of interest e.g. heat density

Next step...turning opportunity into delivery

Policy Development – Local Level

Policy Development - Powers & Incentives

“Localism, Localism, Localism”!

The Localism Bill 2010-2011“The Bill will devolve greater powers to councils and neighbourhoods and give local communities more control over housing and planning decisions”

The Localism Bill 2010-2011“The Bill will devolve greater powers to councils and neighbourhoods and give local communities more control over housing and planning decisions”

Policy Development - Powers & Incentives

Community Infrastructure Levy

General Powers of Competence

Community Energy Fund

Carbon Buyout and Developer Contributions

Discussion

At what stage of development is your LDF Core Strategy? e.g. submitted to Secretary of State.

Do you have policies in place relating to climate change and/or the reduction of CO2 emissions?

If yes:

– Do they apply on-site energy targets for the generation of renewable energy?

– Do they relate to low carbon energy such as CHP and/or district heating?

– Have these policies been adopted or do they form material consideration?

Next Steps

Thank you!